Did your electricity supplier really call?
PUC battles aggressive marketing tactics
One of the many robocalls aimed at Pittsburgh-area residents over the past few months begins with “an apology from your electric utility.”
You’ve been overcharged by your electric supplier, it says. All that stands between you and a “rebate check” is to press 1 on your keypad.
The caller ID, meanwhile, shows the number for a Pittsburgh personal injury law firm which, when reached, says it is not involved in this telemarketing campaign and that its number has been spoofed by scammers before.
In recent weeks, the calls came so frequently, Greenfield resident Tonia Barnes stopped answering her phone. Even though her caller ID sometimes says it’s Duquesne Light, Ms. Barnes knows it’s a spoof.
“They call, and I don’t pick up. They wait a half an hour, maybe an hour, and call again,” she said.
Ms. Barnes is so worried about answering any question in the affirmative — even “Can you hear me okay?” — for fear of consenting to something she doesn’t want, she says no to everything.
Once, she picked up the phone and asked never to be called again.
The representative on the other end of the line laughed.
“These people just don’t care,” Ms. Barnes said.
Some of the calls she reported to the Pennsylvania Public Utility Commission, which certifies and oversees more than 400 companies selling electricity to Pennsylvania consumers.
The PUC is well aware of the problem. Over the past decade, as utility rate caps came off and
consumers began to shop for electricity, regulators have had to navigate the boundaries of giving consumers choice and protecting them from unscrupulous or confusing marketing tactics.
Just last month, the PUC’s bureau of investigations and enforcement proposed an $8.8 million fine against Texas-based Verde Energy for more than 8,000 alleged violations of rules governing electricity suppliers. The investigators are also asking the commission to revoke Verde’s license, blocking its ability to do business in Pennsylvania.
The complaint against Verde includes a menu of alleged malpractice, such as spoofing utility numbers, agents representing themselves as utility affiliates, threats to shut off service and claiming customers must switch suppliers.
Some customers reported that Verde representatives showed up at their doors wearing the logo of the utility PPL, which serves the eastern part of the state. The PUC’s staff claims the company even enrolled three dead people in its program.
Verde declined to comment on pending litigation, but said, “We do not condone misleading sales practices under any circumstances and are committed to providing green energy choices for Pennsylvanians in full compliance with all laws and regulations.”
The company plans to respond to the allegations in April and it will likely be months before PUC commissioners make any decision on the company’s future in Pennsylvania.
The complaint references only the experiences of PPL customers, but Verde is active across Pennsylvania including in the territory of Downtown-based Duquesne Light, which serves customers in most of Allegheny and Beaver counties, and West Penn Power, a subsidiary of First Energy Corp. that covers the rest of southwestern Pennsylvania.
Duquesne Light, for example, has “experienced some very similar impacts” as described in the PUC’s complaint against Verde, said the utility’s new chief customer officer, David Johnson. “We are encouraged that the PUC opened up that investigation.”
But the problem, Mr. Johnson said, goes way beyond one company. He called it a nationwide epidemic that comes in bursts, but seems to have intensified in the past six months.
To complicate matters, many electric suppliers contract with third-party call centers. Those vendors might employ shady tactics to hook a customer, then transfer them to a legitimate supplier. The PUC has brought a number of cases against licensed suppliers who attributed bad behavior to vendors, although they are still responsible for the results.
“I think there’s just some unscrupulous companies out there that will do anything for a dollar. And I think it’s really challenging to get in front of that,” Mr. Johnson said.
A changed market
The PUC has been trying. Nils Hagen-Frederiksen, a spokesman for the PUC, noted that nearly 2 million electric customers shop for electricity in Pennsylvania, representing the majority of electric consumption in the state.
“We do see situations where a small number of suppliers cross the line — with misleading or deceptive sales practices or other violations — and the commission takes those situations very seriously,” he said.
Shopping for electricity is still a confusing prospect for many Pennsylvanians, even two decades after the state deregulated its electric generation market and split it off from the regulated distribution utilities, such as Duquesne Light and West Penn Power.
The bills that customers receive cover a combination of services — a portion goes to pay for actual poles and wires that move the kilowatts, and another portion covers the cost of the electricity.
The utility makes no profit off that latter part — it simply passes along the cost of buying that electricity from a powerplant to the consumer.
That creates opportunity for other companies that think they can procure electricity for a better price or on better terms to market it to customers. Even if utility clients decide to go with a different supplier, they still receive just one bill from their utility.
Rules that govern how electric suppliers can market themselves to customers were written in 2012. Back then, the main concern was door-to-door sales — how to prevent strong arm tactics, ensure customer safety and avoid confusion in person.
Since then, marketing has evolved and phone solicitations seem to have taken over.
In April, the commission issued a letter to energy suppliers that stressed they must adhere to the 2012 regulations on customer interactions whether they make contact with customers in person or by phone.
Tweaking the rules
But new rules are on the horizon.
Earlier this year, the PUC began to invite informal comments about telemarketing rules.
The office of competitive market oversight is weighing whether it makes sense for telemarketers to adhere to the same regulations that bind door-to-door sales — such as letting the PUC and municipal officials know in advance that there will be a telemarketing campaign, and disclosing which vendors will be carrying it out.
The agency is also considering limits on caller ID spoofing — where the incoming number is made to seem like it’s coming from the utility or someone other than a telemarketer — and robocalls.
Other issues may include direct mail and electronic marketing, and whether suppliers should have to disclose if the price they’re offering is significantly above the utility’s comparison price.
And coming up in the next few weeks, the PUC is expected to approve new disclosure regulations for electricity sales aimed at making pricing information clearer and more transparent for consumers.